Theft Is Deflationary - Especially The Crony-Capitalist/State Kind

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Monopoly power in all its forms--in our system, crony capitalism and its partner, the neofeudal state--enables theft on a systemic scale.

If a monopoly forces its customers to pay more for low-quality goods and services because they have no choice, how is that not theft?

If the Mafia raises the price of "protection" on small businesses (another case of monopoly and no other choice), how is that extortion not theft?

When a local government raises junk fees to fund its cronies' excessive (i.e. non-market-rate) salaries and pensions, how is that monopoly power to extort more money from those with no other choice any different from Mafia extortion/theft?

If a pharmaceutical company extends a patent on a costly medication by changing the dosage slightly, how is that not theft via regulatory capture? If a government contractor charges the Pentagon $1,000 for a hammer (all those overhead charges, tsk-tsk--lobbying corrupt politicos costs a lot, you know), how is that not theft of taxpayers' money?

When the Federal Reserve drops the yield on savings to near-zero to funnel all that stolen wealth to its cronies on Wall Street, how is that not theft?

Monopoly power in all its forms--in our system, crony capitalism and its partner, the neofeudal state--enables theft on a systemic scale. When crony capitalism and the state are essentially one system, the propaganda organs of the state and mainstream corporate media combine to persuade the stripmined populace that their theft is not theft, it's "capitalism and democracy at work." This is known as The Big Lie. What we have is systemic theft, predation and exploitation.

Calling things what they really are would upset the apple cart of systemic exploitation. Let's Call Things What They Really Are in 2014 (January 15, 2014)

Correspondent Jeff W. explains that all this systemic theft is inherently deflationary:

ll forms of stealing are deflationary. Stealing cuts into the average citizen’s disposable income, it reduces how much he can buy. Because there are now fewer dollars chasing more goods, deflation is the inevitable result. Stealing is actually worse than a zero-sum game. Society loses more than the thief takes. In addition to losses from theft, a victim often has to spend more on security measures. Theft also has a chilling effect on capital investment and commerce in general.

Consider how many different kinds of theft the American citizen is exposed to: street crime, sickcare industry ripoffs, legal system ripoffs including huge fines for traffic violations, high taxes, interest earnings on his savings that amount to ZIRP, a corporatist state determined to suppress his wages by any means necessary, unending victimization at the hands of predators enabled and protected by the state. If he owns a small business, he has to deal with a corrupt regulatory state, higher taxes, and an enlarged menagerie of predators. Today there are thieves everywhere.


So one big deflation trend is theft. As theft increases, deflation increases. As society collapses and thieves start roaming freely all over the landscape, a deflationary collapse can be expected—absent a determined and persistent campaign of money printing.


Exhibit A for the case that stealing is deflationary is the Dark Ages. Stealing was rampant in the Dark Ages. How did people react to that? By “going medieval.” They wore clothing that made them look poor so as to avoid attracting the attention of thieves. Their dwellings looked poor for the same reason. If they had cash, they would bury it in the ground; no one could be trusted. Unless one was an insider who could get protection from the state, no one’s property was safe.


Capital investments were much too risky, and out of the question. What were the price characteristics of the Dark Ages? Wages were low. Real estate valuations low. Prices of manufactured items (such as they were) were low. Only food was expensive. People can cut back on clothing and shelter, but there is a limit to how much they can cut back on food. In the Dark Ages, people really hunkered down and just focused on basic survival.


Exhibit B is Detroit. Detroit for many years has been a high crime area, i.e. it had lots of thieves running around. What are the price characteristics of Detroit? Wages low. Real estate valuations low. There is very little manufacturing being done inside the city limits today because of high property taxes and crime. There is also very little capital investment for the same reasons.


There is a vicious circle at work here.


1) Thieves control the government;

2) Which results in increased stealing;

3) Deflation results from that;

4) Which gives the thieves a reason to print money and give it to themselves;

5) Which enriches the thieves some more;

6) Which gives them more resources they can use to consolidate their control of the government;

7) Back to step 1.


Many people seem confused about how there could be deflation in the paper (or digital) money era. If they would recognize how much stealing is going on, and if they understood the powerful deflationary effect of stealing, then perhaps they would not be so surprised to observe price decreases, particularly in wages and the prices of manufactured products.

Thank you, Jeff, for explaining the causal connection between systemic theft and deflation. To all those terrified of deflation (for example, central bankers and their cronies holding trillions of dollars in phantom assets and illusory collateral), the solution is obvious: get rid of systemic theft. But since those terrified of deflation are at the top of the monopoly-power thievery pyramid, that is asking the impossible: for the thieves to relinquish their power to steal.

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LawsofPhysics's picture

Give the paper-pushers, cronies, and their puppets in D.C. enough rope and time.  I am sure they will do the right thing.

Be optimistic.  Of course manufacturing a guilotine or two might be prudent as well.

kchrisc's picture

"Hang'em high, cut'em low."

TheGoldMyth's picture

Gday my spare time, i practise amateur psychiatric research/psychiatry :-).

In the field of 'forensic economic psychiatry' i was the first to note that other researchers in this field did not correctly connect the findings that are noted in the study of Stockholm Syndrome, together with the findings of the Standford University Prison experiment. I was the first to note that both ' Stockholm syndrome, and 'Stanford University Prison Experiment are closely connected. The psychiatric consequences of economic crime, cannot be understood or addressed without a thorough working knowledge of both, Stockholm Syndrome and Stanford University Prison Experiment.

Here are some quotes from Wikipedia about the two just mentioned.
"Stockholm syndrome, or capture–bonding, is a psychological phenomenon in which hostages express empathy and sympathy and have positive feelings toward their captors, sometimes to the point of defending them. These feelings are generally considered irrational in light of the danger or risk endured by the victims, who essentially mistake a lack of abuse from their captors for an act of kindness.[1][2] The FBI's Hostage Barricade Database System shows that roughly 8% of victims show evidence of Stockholm syndrome.[3]

Stockholm syndrome can be seen as a form of traumatic bonding, which does not necessarily require a hostage scenario, but which describes "strong emotional ties that develop between two persons where one person intermittently harasses, beats, threatens, abuses, or intimidates the other."[4] One commonly used hypothesis to explain the effect of Stockholm syndrome is based on Freudian theory. It suggests that the bonding is the individual's response to trauma in becoming a victim. Identifying with the aggressor is one way that the ego defends itself. When a victim believes the same values as the aggressor, they cease to be a threat.[5]

Battered-person syndrome is an example of activating the capture–bonding psychological mechanism, as are military basic training and fraternity bonding by hazing.[dubious – discuss].[6][7][8]

Stockholm syndrome is sometimes erroneously referred to as Helsinki syndrome.[9]"

Muse: Stockholm Syndrome

"Stanford prison experiment
From Wikipedia, the free encyclopedia
This article is about the psychology experiment. For the American punk band, see Stanford Prison Experiment (band).

The Stanford prison experiment (SPE) was a study of the psychological effects of becoming a prisoner or prison guard. The experiment was conducted at Stanford University from August 14–20, 1971, by a team of researchers led by psychology professor Philip Zimbardo.[1] It was funded by the US Office of Naval Research[2] and was of interest to both the US Navy and Marine Corps as an investigation into the causes of conflict between military guards and prisoners.

Twenty-four male students out of seventy-five were selected to take on randomly assigned roles of prisoners and guards in a mock prison situated in the basement of the Stanford psychology building. The participants adapted to their roles well beyond Zimbardo's expectations, as the guards enforced authoritarian measures and ultimately subjected some of the prisoners to psychological torture. Many of the prisoners passively accepted psychological abuse and, at the request of the guards, readily harassed other prisoners who attempted to prevent it. The experiment even affected Zimbardo himself, who, in his role as the superintendent, permitted the abuse to continue. Two of the prisoners quit the experiment early and the entire experiment was abruptly stopped after only six days. Certain portions of the experiment were filmed and excerpts of footage are publicly available."


Some of my other work:
cutting edge findings in advanced climate psychiatry that shows empirically, in a lab environment, that when the human brain has a Carbon Dioxide chemical imbalance, the victim is a lot more emotional/agitated when exposed directly to conditions that require discussions about the weather or the question of the 'environment'. In mammals, this agitation is amplfied due to the natural/normal need to talk about the weather that is hard wired from birth, or a very early age in biped mammals.

I was also the first researcher in climate psychiatry to cure vicitms in the lab by adding supplements of information into the diet of vicitms about other anthropogenic chemical emissions, like information about fly spray/pesiticides emissions agriculture, depleted uranium emissions during conflicts, heavy metal emissions and information about other toxic anthropogenic emissions to bring the chemicals in the brain of the victims into some kind of balance and the strong emotions/anger/rage in victims with CO2 chemical imbalance disappeared, and they were able to talk about the weather normally again.

Murf_DaSurf's picture
Four Airlines Are Told to Raise Some Wages by $1 an Hour

After a lengthy campaign by airport contract workers to receive better wages, the Port Authority of New York and New Jersey sent a letter to several airlines late Tuesday ordering them to increase pay for some employees.

The authority’s executive director, Patrick J. Foye, told the airlines to immediately give a $1 an hour raise to workers who made less than $9 an hour. They should eventually receive $10.10 an hour, he said.

The letter was sent to four airlines — American, Delta, JetBlue and United — and affects workers at La Guardia and Kennedy International Airports.

Mr. Foye asked the airlines to grant another request from the workers: to make Martin Luther King’s Birthday a paid holiday.

Contract workers should be paid for the holiday, Mr. Foye wrote, as are Port Authority and airline employees, and the pay should apply retroactively to the holiday this month.

“Employees of your contractors should enjoy the same benefit, especially in light of the importance of this holiday to our country’s history and values,” he wrote.

The letter was sent the same day that President Obama announced in the State of the Union address that he was signing an executive order raising the minimum wage for future federal contract workers to $10.10 an hour. The Daily News first reported on the letter on Wednesday.

The campaign by S.E.I.U. Local 32BJ, a union representing building services employees, has gone on for more than a year and has drawn attention to the more than 12,000 people who work for contractors hired by airlines and terminal operators at New York-area airports. Some of the workers, who clean the cabins of planes, move baggage or push wheelchairs inside the terminals, make less than $8 an hour.

Last week, 32 people were arrested outside La Guardia Airport at a march led by the union on Martin Luther King’s Birthday. Some local politicians were arrested, including Representative Charles B. Rangel and several City Council members.

The letter from Mr. Foye, who was appointed by Gov. Andrew M. Cuomo of New York, also said that the Port Authority wanted to work with the airlines and the union to improve wages and benefits for all airport workers over the next three to five years.

The union said it was pleased that the protest last week seemed to have made a difference.

“Pat Foye’s letter is a promising step forward,” the union’s president, Hector J. Figueroa, said, “and marks the first real progress we have made in lifting thousands of contracted airport workers out of poverty.”



I think they have "inflationary" covered, too

moneybots's picture

“Pat Foye’s letter is a promising step forward,” the union’s president, Hector J. Figueroa, said, “and marks the first real progress we have made in lifting thousands of contracted airport workers out of poverty.”


Nothing occurs in a vacuum.

NotApplicable's picture

As I always tell people who want "more" from government, "Why do you want to impoverish society even further?" Followed by, "Can you really NOT see that we cannot afford this level of wasteful luxury?"

The answers, btw, are ususally blank stares, or the ever wishful thinking "but we need X!"

Winston Churchill's picture

I get " but the man has loads of money".

Never can name that man of course.


LawsofPhysics's picture

...or identify what "money" really is.

FreeMktFisherMN's picture

Any statism is a system of theft and coercion. It's as simple as that. Not sure I get what you're trying to say re: how deflation goes with these other things, as deflation is a good thing and a free market phenomenon as productive people reap the benefits of their increased productivity by having lower prices. 

LMAOLORI's picture



I think the point is cause and effect for the powerful who hate deflation because it hurts their bottom line and OMG the horror " Real interest rates would rise, potentially discouraging investing and spending".


 A fish rots from the head down. 

limit_less's picture

LMAO - A propaganda piece. Deflation = Theft

Good thing = Immoral

It is a progaganda technique called;

Demonizing the enemy
Making individuals from the opposing nation, from a different ethnic group, or those who support the opposing viewpoint appear to be subhuman
limit_less's picture

The premise of the article is stupid and wrong.

"Stealing cuts into the average citizen’s disposable income, it reduces how much he can buy. Because there are now fewer dollars chasing more goods, deflation is the inevitable result. "

eh no, the ownership of the money has changed hands, the money has not disappeared.

If money disappeared when you stole it why would you steal it?

Like I said, a stupid article.

Shameful's picture

Ah those stolen dollars don't go to money heaven, the thieves don't just hoard them for looking at.  It would only be deflationary if they looted those dollars and then destroyed them, anyone hear of that happening anywhere where the burn value of the paper money was not higher then it's spending value?  I love how people can say with a straight face that there is deflation.  The money supply chart looks like a rocket taking off, and prices are cruising up at a mighty pace.  Is the belief that if we all hold hands and look soulfully into each others eyes while intoning "Deflation" that the price of necessities won't climb into the stratosphere?

New World Chaos's picture

True, but I think the main reason that they are shifting from bailouts to bail-ins is because a bail-in is supposedly inflation neutral.  This allows them to pull off even more theft by QE before the inflation becomes obvious to the sheeple.  The author was mainly talking about thievery having secondary deflationary effects, i.e. people spending less on luxury goods and growing a business, which would attract the attention of thieves.  I think this deflationary effect debatable.  As you said, thieves will spend that money.  Spending on luxury goods will probably increase, because big, system-protected thieves are the main problem.  Easy targets might decide to enjoy their money before someone steals it.  People might "go Galt" and remove their production.  People might buy gold because it's hard to steal.  This would end the Ponzi sooner and bring inflation.  

I think we are seeing a separation into a victims' economy (scraping by) and a thieves' economy (crack-up boom, at least until the lights go out).

moneybots's picture

" I love how people can say with a straight face that there is deflation.  The money supply chart looks like a rocket taking off, and prices are cruising up at a mighty pace.  Is the belief that if we all hold hands and look soulfully into each others eyes while intoning "Deflation" that the price of necessities won't climb into the stratosphere?"


Inflation causes deflation.  100% of bubbles burst and deflate.  That includes credit bubbles.  The money supply chart is created out of debt.


limit_less's picture

moneybots - "Inflation causes deflation." you mean booms cause busts.

Inflation and deflation are a medium to long term trend. short term inflation and deflation are booms and busts.

Deflation occurs because you can get the same thing for less in the future.

Busts occur because there was too much credit expansion without a corresponding increase in productivity.

Bearwagon's picture

Let me tell you something: Theft is the oldest trade of all. Anyone who thought otherwise should think agagin.

CrashisOptimistic's picture

Ah yes, the ongoing effort to rescue us from affordable everyday prices.

disabledvet's picture

It's not theft because it works a cross purposes.
"Driving Government itself into bankruptcy" doesn't help the bank.

The Government is its top tier credit.
With interest rates on treasuries at record lows...and going far is thin gruel indeed to be the guy who "bankrupted the State of Illinois."

The existence of bad credits does not preclude the existence good credits.
Indeed "the exact opposite is true" in the USA since the USA economy...even at very low levels of growth...produces enormous amounts of cash flow.

I thought it very telling that on the news of the USA "shutting down" equity markets rallied strongly on the news.

They're just a debt receptacle now.
At some point entire Agencies will simply disappear as "redundant."
The loss of that largesse can...and hopefully made up in the form of health care and social security...but we'll see.

Seize Mars's picture

I don't know about this. I think it's the destruction of productive capital, but deflation?
As our friend LawsofPhysics would say, no one ever toppled a regime or fought a war because of deflation.

Dr. Engali's picture

There is only one solution..... all thieves must be hanged on sight.


Ooops, did I say that in my outloud voice?

I love my NSA overlords.

Kaiser Sousa's picture

only 65 points to go b4 the Dow erases a 200 plus loss...

yeap, nothing fraudulent about that...

teolawki's picture

"Crush humanity out of shape once more, under similar hammers, and it will twist itself into the same tortured forms. Sow the same seed of rapacious license and oppression over again, and it will surely yield the same fruit according to its kind."

Charles Dickens "A Tale of Two Cities"

PTR's picture

As Henry Rollins once sang, "The Dark Ages are right here. Right now."


Rollins Band - "Miles Jam"

Pseudo Anonym's picture

i am an insider.  i am protected by the state.  my money is in the bank. my money is safe.

Unless one was an insider who could get protection from the state, no one’s property was safe.

ed: sarc implied

GooseShtepping Moron's picture

Deflation, were it actually occuring, would be a very good thing. Theft is a sin against God and man, an evil thing. An evil tree cannot bear good fruit. Obviously something is wrong with this conceptualization and it is this.

Theft is not deflationary, it is predatory and disordering in the thermodynamic sense. Theft increases the entropy of the economy. It takes time and effort to build up something of value. Any profitable business, any peaceful and prosperous community, is like a potato that swells slowly underground, building up a surplus of starch with the energy it happens to catch from the sunlight. This is an attractive target to any wandering thief, who in a moment can help himself to the fruits of someone else's patience and labor. Theft dissipates value and leaves behind it the plundered storehouse, the locust-eaten field. The man who is robbed is stripped of not only his goods but also his reinvestment capital and his trust. The entire polity is wounded. I wouldn't call this deflation; I would call it degradation, warfare, and murder. It doesn't take a rocket scientist to figure out that he who is sinned against, suffers.

I won't even bother to address the man's complete ignorance concerning the so-called dark ages. People have their conceits about this and they do not give them up for any force of argument or evidence. They really think the world went through a 500-year Monty Python skit in between the campaigns of Alaric and the building of the Chartres Cathedral. Alas, this was not the case...but that "neofeudal" word plays so well with the audience.

Jack Burton's picture

Theft is the norm. Honesty is seen as weakness and foolishness.

game theory's picture

I disagree...most of the theft described here is *not* really is zero sum. [I'm on my way to get a beer, and you steal my money and buy yourself a beer.] The gov't tries to argue that it knows how to "invest" and so it taxes from me and gives it to gov't workers. The housing bubble in DC/VA over the last 5 years puts any doubt to rest that gov't workers are just stealing/consuming our money instead of letting us do it.  The bankers with their bonuses are the same thing...but they steal so much better than anyone else. Innovation (when it occurs...and it does occur but slowly and rarely) results in the game not being zero-sum. The trick is that many so-called innovators are no better than robbers/charlatans (ie. Autonomy). So it's still just theft (a zero-sum game). Everyone in their right minds would take every penny out of the banks to protest the theft that happens there...only I am not really suggesting that anyone do that because last I heard, calling for a bank-run is a no-no.  

Jack Burton's picture

D.C. is by all accounts one of earth's richest places, the area surrounding the capital is awash with wealth and displays of wealth. Most of the D.C. rich are assured of riches for life, as government funds their riches. Is it any wonder they grab more power every day? They seek to maintain their positions as wealth gabbers. In fact, the D.C. crowd and it's army of cops, military forces and spies are all in place to assure more wealth flows to D.C. and that corporations determine who sits in congress to hand out the goodies. Every congressman is bought by corporate money to enable the crony capitalist state. The average America is increasingly forced to pay more taxes and to work harder for lower wages. Corporate power and government power are allied in the crushing of average Americans. I suspect this will only get worse. Obama will be replaced by the Hillary bitch, or a republican corporate whore, take your pick. War is coming, the Clinton bitch is a war monger and so is most of the republican candidate pool. So war it is.

Anusocracy's picture

Government appears under various names but all have the same function.

To transfer wealth from those who create it to those who don't create it.

game theory's picture

It is a bad situation we are in here in the US. The laser focus on stealing every last darned thing from the citizens has the politicians fully engaged. You expect the theft from corporate America because the boards of directors reward themselves and the executives has been getting worse for 30 much so that being a shareholder is truly a losers game. At some point when the Fed stops meddling around, the markets are going to discipline the gov't by making trillion dollar deficits expensive. It might take a decade or more to happen...but when the bankers and the politicians have taken all they can...all that is left will be for the thieves set upon themselves. With the gov't having all these overpaid do-nothing cops (swat teams for the dept. of education???) sitting on six figure incomes, people should worry about civil war. Or perhaps the banks will hire the military guys for home security...because the day may come when they need it.

Jack Burton's picture

A dirty little secret in corporate America is the near total destruction of shareholders. Boards use their power to reduce and dividens and raise corporate pay and share options. Like you say, for decades the corporations have worked more and more for the cororate managers, who are supposed to work for shareholders, and made compensation a form of theft. Board and managers are sleeping together and take care of each other, while shareholders can get fucked. Besides, the real profits in owning shares go to the front runners and inside traders, NOT the investment stock holder.

q99x2's picture

When the law fails bankers begin mysteriously committing suicide.


LibertyBear's picture

I'm confused by this article. If Inflation is the expansion of the currency supply then Deflation is the retraction of the currency supply. That is not going on.


Inflation is theft, not deflation!

limit_less's picture

Liberty - Exactly, inflation is theft on a massive scale

It destroys the value of your life's work.

The work you did thirty years ago is worthless today.

(I have linked to this article before)


Glass Seagull's picture



Not sure what the point of this imaginative story is? 

"Only food was expensive..."

They didn't eat ipads back then, unlike today, and there is plenty of research that links centuries of inflation with theft (inflation @ t-0 = theft @ t+n).  Maybe it's that old price dynamics were more cyclical due to currency regimes that were more inflexible than now?

Higher prices led to theft/increased competition, physical stress, proneness to disease/infection, death, falls in birthrate, then deflation.

Theft is not - by itself - the cause for multi-decadal deflations.  It's not that simple, never has been, never will be.



kchrisc's picture

Imagine a government of one person. Imagine that person telling everyone, under threat of violence, that he will take from us to "provide" what we could provide for ourselves if we desired. Imagine the insanity.

Imagine a few thousand doing the same to a multitude of millions in the same manner. Imagine the insanity.


"My guillotine can fix what ails government and banksters."

Raging Debate's picture

Agreed with other commentators. Theft is not deflationary and agree it discourages capital formation. I have been stolen from and learned the hard way:

1) Like the Dark Ages pretend your poor dont say a word about any windfall deal or quarter in business.

2) Have a good lawyer ready for when the thieves do come.

3) Tax shelters

Cant hedge much against inflation using investments right now outside of tangible assets. I do prefer RE to gold right now. My society is disgusting and crooked. It seems for every two decent people a third is a crook. If I do leave America, it will be because of this reason.

SilverMoneyBags's picture

Stealing cuts into the average citizen’s disposable income, it reduces how much he can buy. Because there are now fewer dollars chasing more goods, deflation is the inevitable result.

Ummmm...this statement is incredibly backwards.

When deflation occurs the purchasing power of each dollar increases. When inflation occurs the purchasing power of each dollar goes down.

Inflation is what steals your value, deflation increases value.

Would you rather be able to buy 3 apples for $1 or 1 apple for $3? 

stopthejunk1's picture

The OP gets it exactly backward. It is poverty that causes crime, including theft -- not the other way around.

Detroit is emblematic of this. When the economy of the city was destroyed by globalization and deregulation, poverty set in, and as a consequence, crime increased.

Frankly the whole piece reads like an eight-grader wrote it, and does not really merit comment.

ConfederateH's picture

This article is complete bullshit, CH Smith.

If someone steals a piece of art, how is that deflationary?  Or a Rolex?  Or any pure luxury good?

But the worst part is the constant blind chatter about Detroit.  Corelation is not causation and Detroits problem is not deflation due to theft!  Detroits problems are due to one race and the inability of whites to confront it.  Paul Kersey explains it far better than I can...